Establishing Local Business Units

Abstract

Starting operations in a country abroad is challenging. Various typical forms of ventures abroad are introduced in this chapter. The various forms can be designed upon considerations about how the structure of the business unit abroad relates to and is embedded in the main company`s structure. These organizational structures are closely linked to the main company`s own perception and identity. A model of understanding a company’s own approach to structuring itself and its subsidiaries abroad is presented. This is linked to four commonly found organizational designs often present in multinational companies (MNCs). Based on the design of the operation abroad, some insights on staffing and financing are offered. At the early stage of a subsidiary abroad, appointing the most suitable staff is of utmost importance. Advantages and disadvantages of appointing host country nationals vs. expatriates are explained. Furthermore, financing the establishment and operations of the venture abroad are discussed. A particular emphasis is placed on risks stemming from currency exchange fluctuations.